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As we all know, greener and cheaper energy is getting a lot of research and industrial focus these days. A little considered effect of this is the rebound effect, which states that people tend to use the money saved on energy for other energy consuming activities, which may offset the environmental benefits that could be gained. For example, the more cheaper fuel becomes, the more will people travel and consume more fuel. Similarly, the more cheaper home heating systems become, the more they will be used by those people who could not afford home heating so far. Estimates on the rebound effect vary, but can be as high as 30% of the savings.

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This is indeed strange :-) I imagine, one way is to increase taxes, and make it expensive again. But then we will forego increase in economic prosperity, especially amongst poor people. But if we find fuel with no environmental cost, cheap enough, (e.g. printable rooftop solar cells) then will it do away with such rebound effect? I guess it is again tradeoff between prosperity, social equity in short term vs. poverty in long term. (due to climate change.)

I believe it is all based on how people sociologically react to improvements in technology. And who knows, but different cultures might react differently! The point is to take this factor into account when calculating the cost-benefit tradeoffs for different options.

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